Abstract Many patients with critical illness survive the acute episode yet have persistent organ failures requiring ongoing life support and the need for prolonged mechanical ventilation (PMV). PMV is an extraordinarily large financial and clinical burden on the health system-patients with PMV account for nearly half of all intensive care unit costs, and one-year mortality approaches 50%. Traditionally, patients requiring PMV have received their entire episode of acute care within a short stay hospital. However, in recent years there has been a dramatic increase in the use of long-term acute care (LTAC) hospitals for PMV. LTACs are the fastest growing segment of hospital medicine in the United States, increasing at a rate of 12% per year and accounting for $3.1 billion in Medicare spending during 2004 alone. Despite the rapid expansion of the LTAC model for patients with PMV, essential questions remain about their clinical effectiveness and impact on the cost of intensive care. LTACs could be cost-effective model of care for patients with PMV, could raise costs without impacting quality, or may even negatively impact outcomes compared to continued care in a short stay ICU. The overall objective of this proposal is to study the role of LTACs in the care of critically ill hospitalized patients. We will perform an observational cohort study using national claims data from Medicare beneficiaries and an instrumental variable approach to control for selection bias and umeasured confounding. In Aim One we will examine the comparitive effectiveness of LTACs for patients with PMV, looking at both survival and costs of care. In Aim Two we will will determine if the clinical and economic impact of LTACs varies by either patient diagnosis or the type of LTAC--free standing versus vertically integrated (i.e. hospitals-within-a-hospital). In Aim Three we will evaluate the broader impact of LTAC penetration on acute care resource utilization and outcome, testing whether variation in LTAC availability and utilization is associated with resource utilization and outcomes for all hospitalized patients. This study will be the first rigorous analysis of LTAC utilization in critically ill patients and will provide key insight into the role of LTACs in the care of patients with respiratory failure and chonic critical illness.